About a year ago, I had the opportunity to attend a conference sponsored by the American Nuclear Society called the “Utility Working Conference”. This conference is held every year during the first week of August at Amelia Island Plantation, a comfortable family resort in northern Florida that has traditionally had good rates in August. (It is not a big time of year for visiting Florida resorts – the beach weather is pretty good all over the country.) The conference really is a “working” conference where the attendees roll up their sleeves (or wear golf shirts) and work on some pressing industry issues.
Despite some efforts at deregulation and introducing competition in some areas, the electric utility industry is still one where most of the companies have defined service territories that do not overlap much. They provide a product that is vital to the functioning of a modern society; if there are problems in one company’s service area other companies in the industry often send workers to help repair whatever is broken. When it comes to their nuclear plants, the utilities generally agree with the concept that a problem at one plant is a problem at all plants.
I really enjoy attending this focused conference and try to have it on my schedule as often as possible. It is a great learning experience and a great opportunity for meeting industry leaders – most of the attendees have significant responsibility and decision making authority.
One of the people that I met last year was Bill Coley, the current CEO of British Energy. He gave a talk about the challenges and opportunities that his company faced as its operating nuclear plants age and as the natural gas from the North Sea continues on its faster than predicted depletion curve. Bill is not a young guy – before accepting his new job and moving to the UK he had completed a long (37 year) and successful career at Duke Power, one of the most respected utilities in the US. It is a company with an excellent record of safe and economical nuclear plant construction and operation.
Bill has made plenty of money and has plenty of community service interests, but he also demonstrated a strong sense of responsibility for sharing the knowledge that he had gained and for making the world a better place. That attitude is quite common in the nuclear business – there are few people who have stuck it out in this field who are motivated by greed. There are a number of easier ways to make a living, especially if you are smart enough to be qualified to design and/or operate a nuclear power plant.
We shared a table at lunch after his talk and had an excellent conversation about the contrast between a golf-filled retirement and what Bill was facing in his role at British Energy. I was impressed by his candor, his wit and his dedication to doing a great job for his new home. As a direct result of that conversation, I began some research on British Energy and ended up with a decision to begin periodically investing in the company. Its prospects for growth are long term and it faces some substantial challenges as it works through the process of updating or retiring its existing plants, but I believe that the company is being led by the right guy would could instill the right kind of operational excellence.
I was kind of disappointed, but not surprised, when I read the following headline on Telegraph.co.uk – How Britain’s nuclear chief Bill Coley left the US under a cloud. Nothing that I found in my research on Bill, Duke Power, or British Energy had indicated any “clouds” in Bill’s background, so I read the article very carefully. I guess the headline writer did his job of pulling me into the story, but he/she did not convey much truth in that pithy statement.
Here is the “cloud” as described in the article
Yet it turns out that Duke had an accountancy problem of its own. Like UK utilities, it is allowed to set prices to produce a rate of return set by its regulators. A whistle-blower revealed Duke had allocated costs of the unregulated operations to the regulated business, thus depressing the latter’s profits, allowing it to charge higher prices.
The misreporting added up to $124m. Coley was president but the official audit was silent on what he knew. He retired shortly afterward from the company he loved, before his 60th birthday and before Duke’s retirement age.
I did some looking on the web for information about the “accountancy problem” and found that there was, in fact, an issue that was resolved during the early fall of 2002 regarding the allocation of expenses between regulated and unregulated arms of the company. The issue was complex and could cause eyes to glaze over – the audit required the review of more than 13,000 documents. There was also a “whistleblower” involved who asked for several million dollars in compensation because he was reassigned from a job with an office paying $90,000 to $100,000 into one with a cubicle paying exactly the same salary. (I have no sympathy there; in the DC area, cubicles are a way of life. I have been working in a cubicle for the past six years.) You can find out more from the disgruntled employee at Duke Power Company Audit.
As I dug through that information, I still did not find anything that indicated any blame associated with Bill Coley other than a statement that said that the audit “was silent” on his involvement.
Based on having met the man and having talked to people who know him well, I find his explanation for his career choices far more satisfying than the vague innuendo that he was somehow forced from his job at Duke.
Why? The enjoyment diminished after the run-in with the regulator, he admits. He blames the post-Enron environment. “It’s less fun when you have to put up with all sorts of media issues,” he says. Duke reached a settlement with its regulator and was not prosecuted, he emphasises, but adds: “After 37 years, I said I do not need to do this and I can afford not to do it.
“Inevitably you start thinking about your mortality – what have you contributed? It was a conscious decision. I’ve always spent a lot of volunteer time in the community raising money,” he says. “We’ve given a lot of money over the years to charity: we’ve focused on that. We’ve two principal charitable efforts – our church, my university and Jane’s university. We said those are places where we can contribute and make a difference.
“I’d done 37-and-a-half years with the company. I bought the house at Pinehurst in 2000, which was to be my retirement home and had it renovated. My thought was I was going to play a lot of golf.”
I have known a lot of people who thought that was going to be the way that they would spend their time after many decades of working hard and making solid investments. I have even known some who maintained that plan. Most of the people that I respect and whose company I enjoy got bored on the golf course within weeks and took on other challenges. Bill Coley is one of those people and I wish him continued success as he works hard to put the UK on a sustainable energy path that includes a number of new nuclear power stations.
I have high hopes that he will succeed before the UK is hopeless dependent on natural gas from Russia.